Week Ahead (15 December)

Monday, 15 December – Senators to vote on Finance Bill (PLF) in France 

On Tuesday, the Social Security Bill (PLFSS) was approved with 13 votes to spare (247 in favour, 234 against and, crucially, 93 abstentions)  – much to the relief of Prime Minister Lecornu whose team had spent the prior weekend countering rumours that his resignation could be imminent.  

The Senate will send the text back to the Assembly via a preliminary question (this is essentially a motion to reject the bill before it is examined) and the Assembly will then have to vote again on the bill, likely on 16 December. The outcome is expected to be similar to last Tuesday’s vote unless we have at least 13 MPs change their minds or more absences than expected.   

Attention now turns back to the Finance Bill (PLF) which has proven more contentious – as a reminder only one MP voted in favour at first reading with 404 votes against and 84 abstentions.  Today, Senators will have their turn to vote on the PLF.  Their text will differ from the government text to which the Assembly defaulted when it voted against its own amended bill – therefore a Joint Committee (CMP) will need to convene.  This consists of seven members of parliament and seven senators – they will sit together on Friday 19 December to try and agree a common text.  In order to improve the prospects of this happening, meetings are scheduled in the coming days between Senate Leader Gerard Lacher and committee chairs.    

An agreed text by the CMP would increase the grounds for optimism that a PLF can be voted through, but the political forces remain broadly pessimistic.  Socialist Party First Secretary Olivier Faure, who urged his MPs to vote in favour of the PLFSS, has indicated that his party would have to vote against the finance bill as currently formulated unless the government withdraws certain tax breaks.  He has called for negotiations to continue into January if necessary to find an acceptable compromise text.   

In this eventuality, the government would have to pass a special law which would be a short and technical text authorising only the collection of taxes and public resources necessary to finance essential public spending, based on the 2025 budget (a rollover essentially).  Negotiations would then continue in January albeit without any guarantee of success at that stage.   

W/C Monday, 15 December – Key week for Mercosur deal: Strasbourg plenary to vote on Mercosur deal safeguards ahead of von der Leyen’s visit to Brazil 

This week is set to be decisive for the long-running EU–Mercosur agreement due to two key events: the European Parliament’s plenary vote on 16 December on the safeguard regulation linked to the deal, and preparations for the planned 20 December signing ceremony in Brazil, which Commission President von der Leyen and European Council President Costa intend to attend if member states give their final approval. However, developments over the weekend have injected fresh uncertainty into the timeline. 

Last week, the European Parliament’s International Trade Committee (INTA) adopted its position on the Commission’s October 2025 agricultural safeguard package, designed to reassure sceptical EU capitals that the December 2024 political agreement with Mercosur will not destabilise sensitive EU farming sectors. The draft regulation, which was approved with 27 votes in favour, 8 against and 7 abstentions, would allow the EU to temporarily suspend tariff preferences for Mercosur agricultural imports if market disruption occurs. 

MEPs strengthened several elements compared with the Commission’s proposal. They lowered the market-surge threshold that would trigger an investigation (from a 10% rise in imports to 5% on a three-year average for sensitive goods such as beef and poultry), shortened the Commission’s investigation periods (from six to three months, and from four to two months for the most sensitive products), and added the possibility of a reciprocity obligation requiring Mercosur exporters to meet EU production standards. 

The plenary vote on 16 December will determine Parliament’s negotiating mandate for interinstitutional talks with the Council. Nevertheless, political dynamics remain fluid: although INTA found a majority for the compromise, divisions cut across groups, and several delegations have signalled they may table additional amendments ahead of the plenary.  

Meanwhile, at Council level, work continues to assess whether a qualified majority exists to approve the overall Mercosur package ahead of the planned Brazil signing. The arithmetic remains tight. Denmark is pressing ahead with plans to schedule a decisive vote of EU ambassadors this week, with the explicit aim of enabling von der Leyen to travel to Brazil on 20 December. According to the Danish presidency, the intention is to hold the vote despite mounting resistance from several capitals. 

France escalated its opposition on Sunday evening, formally calling for the decision to be postponed. Paris argues that more time is needed to secure what it describes as “legitimate protections” for European agriculture and continues to insist that the agreement “is not acceptable as it stands,” citing unresolved concerns over mirror clauses, sanitary controls and safeguards. Some EU capitals have warned that another delay could effectively kill the deal after more than 25 years of negotiations. Italy’s position is also crucial: Rome has not formally stated its intention, but the October safeguards are seen as having addressed several of its core concerns, and Italy’s export interests in Mercosur are significant. Without Italy, the group of sceptical states does not reach a blocking minority. 

For their part, Mercosur governments have made clear that expectations remain set on a 20 December signing, while warning that another postponement would undermine trust. Against this backdrop, this week’s Parliament plenary vote and efforts to secure a qualified majority in Council will determine whether von der Leyen and Costa proceed with the planned trip to Brazil or whether the agreement once again slips into uncertainty. 

Thursday - Friday, 18 - 19 December – Last European Summit of the year; final attempt to unlock Ukraine financing via Russian assets 

EU leaders will meet on 18–19 December for the final summit of 2025, with discussions centred on whether the bloc can finalise a framework to use frozen Russian sovereign assets as collateral for a major loan facility for Ukraine. Kyiv’s financing gap is projected to become critical by April, making this week a key political moment. 

Last week, EU ambassadors greenlit the Commission’s proposal to immobilise the Russian central bank assets indefinitely under Article 122, replacing the current requirement for unanimous six-month renewals. This shift is intended to prevent a situation where sanctions lapse unexpectedly, an outcome that could leave Belgium, home to Euroclear and the bulk of the assets, liable to return the funds and potentially absorb the full repayment risk of any loan. 

Despite this step, Belgium continues to express strong reservations. Prime Minister Bart De Wever reiterated that “there are many legitimate objections regarding the legality” of using Article 122 for a permanent freeze, pointing that the Treaty clause is tied to an EU “state of emergency,” which he argues does not apply since Ukraine is not part of the bloc. Belgium’s concerns focus on both legal exposure and financial liability, particularly in the event of Russian retaliation or successful litigation. 

Over the weekend, resistance to the Russian-assets-backed loan widened beyond Belgium. Italy, alongside Malta and Bulgaria, formally called for exploring alternative financing options in a letter circulated on Friday evening. Czechia’s newly installed prime minister, Andrej Babis, also came out against the proposal on Sunday, stating that Prague is unwilling to provide financial guarantees to Belgium. Hungary and Slovakia also remain opposed. 

Meanwhile, Russia has escalated its response, declaring the EU’s plans “illegal” and announcing that it is suing Euroclear in a Moscow court. The Russian central bank stated that assets would be defended in “national courts, judicial authorities of foreign states and international organisations,” and warned of the “harshest reaction.” The legal action highlights precisely the litigation and retaliation risks Belgium has been flagging during negotiations. 

In parallel, Belgium has proposed several amendments to the Commission’s loan structure, centred on additional safeguards for Euroclear and stronger-risk sharing across the EU. These include: 

 • a new cash buffer, funded through windfall profits generated on the immobilised assets (around €4bn last year), to absorb legal costs and revenue losses from retaliations.  

• enhanced guarantees by member states to cover potential legal disputes or settlements; 

• instant liquidity mechanisms if Euroclear is affected by adverse rulings or enforcement actions; 

• the possibility of including other EU financial institutions that hold Russian assets in the risk pool. 

COREPER discussions intensified over the weekend. A meeting originally planned for Sunday was postponed to Monday evening to allow further legal fine-tuning of the Commission proposal by the Danish presidency, aimed at addressing Belgium’s concerns. 

At the political level, engagement has intensified. Commission President von der Leyen and German Chancellor Merz met with De Wever in Brussels on 5 December to discuss the revised proposal, while European Council President Costa stated last Tuesday: “I think we are very close to obtaining a solution.” Leaders increasingly describe the immobilised assets as Europe’s strongest current instrument for sustaining Ukrainian financing, though significant technical details remain under negotiation. 

Fallback options exist but are politically sensitive. EU-level borrowing faces resistance from fiscally conservative northern governments, while direct national contributions are unpopular among high-debt countries such as France and Italy. Their limited appeal effectively keeps attention on the Russian-assets-backed model as the primary focus for the summit. 

Friday, 19 December – Council poised for a breakthrough on digital euro 

EU finance ministers are preparing for what could be a final political agreement on the digital euro framework on Friday, after the Danish EU presidency signalled last week that member states are “within reach” of a deal. According to the presidency, the Council’s compromise package is now sufficiently stabilised for ministers to adopt it formally, clearing the way for negotiations with the European Parliament in 2026. 

The digital euro is conceived as a public, central-bank-issued electronic complement to cash, legally recognised as a means of payment throughout the eurozone. The initiative sits within the EU’s broader effort to strengthen competition in the payments sector, reduce reliance on non-EU payment firm, and modernise monetary infrastructure in line with the rise of digital transactions. The ECB has been the driving force behind the project, moving from its “investigation phase” into a more detailed design phase, while political institutions are now determining the legal and operational framework needed before any future issuance. Importantly, even if the legislation is adopted, an actual decision to launch the digital euro would still require the standard approval of the EU institutions. 

At last Friday’s ECOFIN, Commissioner Valdis Dombrovskis welcomed progress on the most sensitive elements of the package. The first concerns maximum holding limits, regarded by member states and banks as crucial to preventing destabilising outflows from commercial deposits. Earlier negotiations exposed differences between the ECB and Commission, which favour a single eurozone-wide cap, and several capitals seeking more national discretion. Italy has consistently supported the ECB’s position and previously proposed language linking the cap to “the principle of an open market economy with free competition,” combined with enhanced reporting obligations to the Council, Parliament and the Eurogroup. That formulation appears to have facilitated convergence. 

The second area relates to compensation and obligations for banks. Under the draft text, banks would be required to provide core digital-euro services, such as opening, funding and withdrawing balances, free of charge to users. Ministers also aligned on rules capping the fees banks can levy on merchants, limiting them to the average cost of international debit-card transactions, with the option to reduce the cap to reflect national averages. 

If finance ministers validate the compromise this week, the Council will bring its final text to the European Parliament, where MEPs are expected to adopt their negotiating mandate in the spring. For now, the Council’s convergence marks the most concrete movement on the digital-euro file since the ECB began exploring it, raising the likelihood that interinstitutional negotiations can begin early in 2026.